UPDATE 3-Facebook prices at top of range in landmark IPO

May 17, 2012|Reuters

CHALLENGES REMAIN Facebook will celebrate its Wall Street debut with anall-night "hackathon" at its Menlo Park, California,headquarters starting on Thursday evening, a company traditionin which computer programmers work on side projects thatsometimes turn into mainstream offerings. Despite the high expectations, Facebook faces challengesmaintaining its growth momentum. Some investors worry the company has not yet figured out away to make money from the growing number of users who accessFacebook on mobile devices such as tablets and smartphones.Meanwhile, revenue growth from Facebook's online advertisingbusiness, which accounts for the bulk of its revenue, has slowedin recent months. Would-be investors have been warned by some financialadvisers against jumping into Facebook right away, but thewell-known brand could still attract enough interest to exceedthe 458 million shares traded the day General Motors went publicafter emerging from bankruptcy in 2010. One UBS adviser initially received calls from 12 clientsclamoring to buy shares of Facebook, but over the past couple of weeks, two have changed their minds. "A lot of people are thrown off by the recent negativestories in the press," the adviser said, speaking on conditionof anonymity. "One guy was worried about General Motors stoppingits advertising on Facebook." GM said on Tuesday it would stop placing ads on Facebook,raising questions about whether the display ads on the site areas effective in reaching consumers as traditional media.

Overall, financial advisers are struggling to manageclients' expectations about what the stock will do and in somecases, if they will be able to get any stock for them. "People want to just own it because they think it's the nextGoogle and they missed out on that," said a financial adviserfrom Wells Fargo Advisors, the brokerage division of Wells Fargo& Co, which is part of the syndicate underwriting thedeal. Facebook has 33 underwriters for the IPO, led by MorganStanley, JPMorgan and Goldman Sachs.